Eventful day in Brussels! Over the week-end it sounded like a formality, deal was supposed to be done… Well not quite! There’s an allegory of the Excel circular reference here: Ireland and Norther Ireland want a “regulatory alignment”, so in essence Northern Ireland needs to be in the common market for that to happen, but Northern Ireland’s DUP (Theresa May need their support in the so called ‘Coalition of Chaos’) wants to leave the EU on the same terms. Bug. On that basis, it would be simpler for Republic of Ireland to leave the EU and integrate the UK…And on top of that, the Scots are saying – quite fairly – that if Northern Ireland is allowed to stay in common market, that should not be a problem! So Brexit is far from being shaping up and one can wonder if the only solutions aren’t walk away of negotiations or remain… British Pound took a hit quit understandable, after GBPUSD had traded close to 1.3550, it is now back below 1.34. GBPEUR is trading down also obviously, around 1.1300. ADP NFP later today, expected at 191k.


US Crude Oil Inventories later today also after they showed a -3.4M barrels withdrawal last week. Has oil seasonally peaked after OPEC extended the cut until mid-2018? The cut of -1.8M barrels per day from OPEC, Russia and 8 other members can be seen as not enough. Also, there are still compliance issues, data cheaters and exemptions. Also, US Shale Production could keep moving up and more than compensating those cuts. So once again, market rebounded on speculation, but the overall supply glut is still there, and price could erode slowly but surely…


Back to the grains. A bit all over the place, sideways session. ABARES gave an estimate of the Australian wheat crop… 20.3MT, phew! So far so good, as long as it is above 20MT, market won’t feel shocked, but the storms are to be monitored, but quality will be impacted before quantity in some extent, but more showers are possible. La Niña seems to be confirmed but expected weak. US are cold and dry but guess what… That’s normal and wheat needs it to be in dormancy and the moisture needs would become much lower. So no real issue on wheat. So wheat was down overall (apart from Minneapolis, on a spread party with +3.50 cents): -4.25 cents in Chicago, -0.50 cents in Kansas. On the other side of the pond, rebound +€2.25 on MATIF and +£1.90 on London Feed. Corn was down -5.25 cents (nothing much negative in South America, weak export Inspections) while Soybeans were up, +4.25 cents, dragged up by good US Export Inspections, the level of $10 is very attractive technically, but there was a rejection after a spike above the 4 digits handle.


And night session is banging on it again as Soybeans are trading up +1.00 cent. Corn is barely ticking up overnight, while Wheat markets are generally down -1.00 cents. Nothing exciting. MATIF is correcting -€2.00 but to be fair this is the usual spread dance, I shall stop talking about Z7 soon, the rest of the curve is down 2 ticks. London Feed is yet to trade, as well as CME EU (will it?).


US Export Inspections were strong on Soybeans, 1,800.5kT… But this would need to be stronger to raise USDA’s target! Compared to last year, this is far behind (37% versus 44%) but it is still right on the longer term seasonality but watch closely. Corn inspections, same kind of story… In worse… With only 586.2kT inspected, the seasonal delay starts to be quite worrying actually, 16% of the target is completed versus 24% last year and 22% on the long term average. Why on earth did USDA rush to increase the US exports by +1.91MT to 48.9MT on the latest WASDE? Marketing year to date, US corn exports are down a staggering -43%… They are only expected to be down -16.04% year on year… Oops! Wheat shipments were as expected, 409.6kT, a bit lagging. Here also, why did USDA rushed increasing the WASDE exports by +0.68MT to 27.22MT? Wheat is seasonally lagging, 47% of the target is completed, 48% last year, 52% on average. Nothing massively worrying, but nothing exciting either.


South Korea Kocopia bought 55,000T of corn at $193.48 CNF. Japan is seeking 154,694T of food wheat from US, Canada and Australia. Jordan (wheat) and Turkey (corn) tenders are steel on. China managed to sell a good 248,654T of its wheat reserve, 12.5% of the volume offered. Quite a success. They also sold 3,600T f their imported wheat (4 years old) Russian wheat exports are pegged at 35.3MT by Ikar, USDA WASDE is at 33MT.

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